This is a guest post by Madhusudan Pandya, senior advisor of international market Development at Ciena
A 5G-first future is fast becoming a reality and Asia-Pacific (APAC) is set to lead, with 1.14 billion subscribers, accounting for 65% of global 5G subscriptions by 2024.
From mature markets like South Korea to countries like India and Indonesia which are quickly catching up, telcos across the region are preparing for the next leap in wireless connectivity, anticipated to power new and innovative ways of doing everyday tasks and unlock immense value. For example, 5G forms the foundation of smart manufacturing by enabling new technologies such as process automation, remote monitoring, and collaborative robots on the factory floor – resulting in a potential $740bn boost to global manufacturing GDP.
For enterprises performing advanced operations and customers using smart devices, the perks of high-speed, low-latency data connectivity is clear. However, the business case for telcos is undefined: Will they recoup their initial investments? Will consumers be willing to pay more for 5G?
To capture the opportunities presented by the global 5G rollout, which is estimated to generate $13.2tn in global economic value by 2035, telcos are innovating to optimise their networks and enhance existing and future customer relationships.
Shifting to 5G is capital-intensive, with global carriers expected to spend $144bn a year. Despite this, telcos cannot simply charge more for 5G data as subscribers will not readily accept significant rate hikes. Instead, each telco’s revenue model will depend on how well they can unlock new revenue streams to ensure that every capex (capital expenditure) and opex (operating expenditure) dollar is spent effectively.
Take gaming, for example, where the global market will reach $435bn by 2028. So far, most wireless networks lack the capabilities to provide a truly real-time cloud gaming experience. This changes with 5G and the promise of network slicing which will deliver a high-bandwidth experience whenever and wherever. In Asia, the world’s largest gaming market, we have already seen South Korea’s SK Telecom partner with Microsoft to deliver its 5G-based mobile cloud gaming service, Project xCloud.
Similarly, the metaverse gives telcos a chance to monetise their 5G investments. From governments across APAC planning to harness the platform to increase the efficiency and quality of public services, to Southeast Asia’s largest bank DBS looking to bring banking services to the metaverse, businesses are all vying for a piece of the metaverse opportunity estimated at over $1tn in yearly revenues. While it’s still early days, telcos like China Mobile and SK Telecom are already building platforms based on virtual or mixed reality.
Beyond gaming and the metaverse, telcos with foresight are also jumping on the limitless opportunities that 5G can offer enterprises keen on digital transformation. It is not uncommon to see telcos encouraging enterprises to tap onto their 5G networks, leveraging services such as real-time network slicing and the ability to run cloud applications on-demand. Enterprise customers would not need to worry about how to adopt 5G or build their own 5G infrastructure – and can use 5G as-a-service in real-time. In a digital-first future, such all-encompassing, open and cloud-ready solutions could soon be the cornerstone of every enterprise’s operations.
While 5G-enabled digital transformation will allow telcos to support a new generation of use cases, modern networks that can constantly adapt to the ever-changing network demands of an ‘always-on’ digital economy are essential.
This is especially so as technologies like the internet-of-things (IoT), artificial intelligence and machine learning are becoming commonplace and putting further pressure on networks, while remote work and an ever-increasing demand for over-the-top (OTT) content are contributing to a surge of activity at the edge of the network.
However, such transformations cannot be easily accomplished through the traditional method of scaling networks – where customers wait for services to be provisioned or changed. In its place, telcos are looking to adopt adaptable, intelligent, and self-optimising 5G network solutions, which are designed to be open, scalable, and automated.
From intelligent automation that enables network slicing, to high-performing transport architecture that is easy to build, scale and service, there are several essential building blocks that would help telcos scale up bandwidth and increase 5G performance.
Taking a cue from operators outside of APAC – Dish in the US is working to build the first cloud-native, Open RAN-based, virtualised 5G network, while Telefonica is using SDN to optimise its multi-vendor transport network to support the roll out of 5G services.
Developing partnerships to ensure viability of 5G services
Essentially, 5G is more than just faster internet connections for avid gamers or Netflix bingers. It is really enterprise applications, in industries such as agriculture, health and transport, that will be the key drivers for much of the economic value that 5G is slated to bring and potentially adding $1.4tn to global GDP in 2030.
Instead of creating vertical 5G applications themselves, developing strong cross-industry partnerships is how telcos will win a share of the value generated from new use cases. We are already seeing telcos collaborate with companies that are not immediately associated with them, such as Hyundai’s plans to deploy Singtel’s 5G infrastructure network solutions at the Hyundai Motor Group Innovation Centre in Singapore.
Outside of APAC, telecom tower company American Tower and Ciena have embarked on a proof of concept in Europe to advance open standards for private 5G, which will help to further extend 5G’s use cases by configuring networks in a way that can be easily implemented across many industries and environments in the future – from factories to university campuses to hospitals.
The way forward
Even as 5G has yet to establish a strong foothold, countries in APAC and the rest of the world are already racing towards the next step in high-speed connectivity, with talks and trials to explore 6G networks. As demand for high-speed connectivity continues to grow, and technologies improve to keep pace, telcos should look ahead, translating customer needs into network innovations and, in turn, into revenue-generating services.